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L-1 Visas: H-1B's Quiet, Powerful Cousin

You're probably familiar with H-1B visas and the annual cap on them. Their lesser-discussed cousin, the L-1, has no such yearly limit.

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American workers may be encouraged by a slowly dipping unemployment rate, but in the IT field, both novices and veterans voice continued frustration about competing for jobs with foreign workers holding H-1B or L1 visas.

Advances in technology and globalization, as well as work-visa laws, during the past decade have made it posssible for companies to hire foreign IT workers and pay them less than they would an American worker.

Now, pundits and lobbyists calling for work visa reform worry that President Obama, faced with a Republican Congress, will expand visa programs as he considers taking executive action on immigration laws.

In a blog post published on The Hill, Daniel Costa, director of immigration law and policy research at Washington think tank the Economic Policy Institute, says that under-regulated visa programs like the L-1, while appealing to businesses, only end up exploiting low-paid foreign IT workers and shrinking wages for everyone employed in similar roles.

"Employers have a huge financial incentive to hire an L-1 worker instead of an American or an H-1B, and no law requires them to be audited or investigated," Costa wrote. "That's why the tech industry has lobbied the Obama administration for years to expand the definition of L-1B 'specialized knowledge,' which would allow them to bring in countless more underpaid L-1 workers."

(Source: www.us-immigration.com)

As compared to the H-1B, L-1 visas are seen by Costa as more of a culprit in reducing US IT wages because L-1 visas -- and similar temporary visa programs like the F-1 Optional Practical Training (OPT) program for foreign graduates of US universities -- are mostly unregulated, and include no requirement that employers pay L-1s or F-1s market-rate wages. Yet they are used to employ hundreds of thousands of foreign tech workers. H-1B, on the other hand, has a requirement stating that employers pay a "prevailing" wage.

Most L-1 workers are in IT-related roles -- and some of the biggest users of L-1 visas are IT outsourcing firms like Infosys, Tata, Wipro, and Cognizant. These are all companies with a business incentive to replace US workers. L-1 visas give outsourcers a cheaper and easier way to send an employee to work for a US affiliate versus using more expensive and harder-to-obtain H-1Bs, which have an annual cap of 65,000 visas. Between 2009 and 2013, an average of 67,855 L-1 visas were issued per year, according to US State Department records. But there's no limit on the number of L-1s allowed in a given year.

Yet not as much is known about L-1s and their appeal to international companies as a substitute for H-1Bs. Here's a list of key facts about L-1s and how they compare and contrast with H-1Bs.

1. How is eligibility determined? The two types of L-1 visas are L-1A, which is for employees at the managerial or executive level, and L-1B for employees with "specialized knowledge," which refers to the demonstration of skills and knowledge specific to the company itself. If your company has a foreign office, it can transfer either of these types to a US parent, branch, affiliate, or subsidiary of the company using an L-1.

The H-1B visa gives US companies allowance to employ workers from overseas in specialty occupations, requiring technical expertise in specialized fields like architecture, medicine, software, and engineering. Individuals eligible for an H-1B need a bachelor's degree or 12 years of work experience in specialized knowledge, or combinations of education and experience, and must hold a job offer from a specific, visa-sponsoring US company. Without work at that specific company, the worker is required to either find a new sponsoring company or leave the US.

2. How long do they last? An L-1 visa is good for three years if the worker is joining an existing company, but one year if joining a new company. Two-year extensions are allowed, for a maximum timeframe of seven years for an L-1A, and five years for an L-1B.

An H-1B visa has an initial run of three years, but extensions are available for up to six years. Another three years can be added for a worker if he or she files a successful I-140 Immigrant Petition (i.e. an employment-based green card) to become a permanent resident before the six-year extension is up.

3. How many visas are available? For L-1s, there are no limits on the number of visas available in a year.

There are 65,000 H-1B visas available per year, with exemptions for up to 20,000 individuals with higher degrees from US universities.

4. When and how do you apply, and how much does it cost? Workers can apply for an L-1 at any time. The applicant's employer must submit an I-129 form to the USCIS (United States Citizenship and Immigration Services) with documentation proving that the foreign parent, subsidiary, affiliate, or branch and the corresponding US company meet qualifications. An L-1 visa costs $825.

Applications for H-1B visas are available on the first business day in April each year. The sponsoring company must submit an I-129 form (a petition for a Nonimmigrant Worker) to the USCIS. An H-1B costs approximately $2,000.

For both H-1B and L-1 visas, there's an additional $2,250 fee if the company employs 50 or more employees in the US and has more than 50% of those employees already in H-1B or L-1 status. This applies to both first-time and renewal cases.

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Shane O'Neill is Managing Editor for InformationWeek. Prior to joining InformationWeek, he served in various roles at CIO.com, most notably as assistant managing editor and senior writer covering Microsoft. He has also been an editor and writer at eWeek and TechTarget. ... View Full Bio

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Shane it's a very interesting overview. Do you have any information on the trends over the past years in these L-1 visas? It would be interesting to see if they are increasing especially from 2008 to now.

Shane, your analysis is good comparing both visas. But L1 usage is much restricted for companies and path to green card is faster, so they quickly loose the workers. Moreover both visas are getting expensive and lot of administrative burden on the companies, so they first prefer local like green card, citizens in most of the jobs, only hard jobs like programmers sometine goes to these visas or graduates from colleges including foreign students, It is not alarming as you described.

Regarding the the usage of these visas by these tech companies, it is about their cost/budget and quality levels.

Instead of moving abroad theya are atleast trying workout something by staying, that way it is better.

From the documents I've seen, the number of L-1s have been going up and down incrementally over the past six or seven years, somewhere between 60,000 and 80,000 visas issued per year. But they've been on the rise since hitting a low point of 42,000 L-1s in 2005.

great article Shane. It is strange that there is a lot of talk about H1-Bs, but not L1s. I think it is important that when discussing immigration, there should be an assessment of all types of visas which are given to foreign nationals. I heard the majority leader of the house saying that they have other priorities than immigration. This issue will be put on hold until the next election.

Thanks it's certainly an interesting factor in the mix of salaries for IT professionals. It will be interesting to see if the government decides to cap these visas if they impact the marketplace significantly. It would be interesting to compare how the employment rate would look for IT professionals in the US if all of these 80,000 jobs were US only employees. From my understanding we still have a labor shortage in the US for IT professionals, so would this add to the shortage?

There is one major fault with your arguement in the areas of L-1B's: Do you have any idea how difficult they are to obtain? Ask any immigration attorney who files L-1B's for tech companies. The USCIS has raised the bar so high they are virtually impossible to get.

The big boy's bring folks in on blanket L-1B's issued at US Consulates (where the bar is pretty low, depending on the visa officer), but when it comes to renewal time, the USCIS in the states denies them. They issue RFE's that start out with basically, "just because you were approved the first time doesn't mean we can readjudicate it now".

At the same time, the L-1B holders who may not be getting the prevailing wage depart the company the first moment they can and apply for an H1B during "cap season".

This IT Trend Report highlights how several years of developments in technology and business strategies have led to a subsequent wave of changes in the role of an IT organization, how CIOs and other IT leaders approach management, in addition to the jobs of many IT professionals up and down the org chart.